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The Triumph of Industry

Explore the rise of big business and industrial growth during the post-Civil War era, fueled by natural resources, a growing workforce, and the rise of capitalism. Discover how corporations gained a competitive edge through monopolies and trusts, revolutionizing industries and impacting people’s lives.

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The Triumph of Industry

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  1. The Triumph of Industry The Rise of Big Business

  2. Industrial Growth • Mass goods were needed during the Civil war • Fuels of industrial Growth: • Natural resources- coal, forests, rivers, oil • Growing workforce- immigration and people moving to cities • Capitalism- • Entrepreneurs- trying to make money- fueled society with jobs and ideas • Government- Protective Tariffs and laissez-faire policies

  3. Impact • World Markets Linked • Jobs becoming mechanized • Jobs becoming unskilled • More goods produced • People move to cities • Cities grow • Immigration increases • More jobs • Environmental impact • Peoples lives transformed

  4. Spiral Growth • Industry increases industry??? • Example, more railroads means more production of railways, rail road cars. • More railroads means more goods transported, which means more consumers, which means more goods can be produced Steel - Bessemer Process- invented by Henry Bessemer- better way to produce steel -Skyscrapers and suspension bridges now possible • Leads to Mass Production

  5. Corporations Develop • Corporation- A number of people share the ownership of a business. • If a corporation experiences economic problems, the investors lose no more money than what they had originally put into the business. • Corporations access to large amounts of money, funded new technology, entered new industries and run large plants across the country.

  6. Gaining a Competitive Edge • Corporations tried to maximize profits in several ways: • Paying workers less wages • Advertising products • Gaining a Monopoloy • Monopoly- Complete control of a product. • Cartel- businesses making the same product would agree to limit their production and keep the prices high for that particular item. • Trusts- Companies assign their stock to a board of trustees, who combine them into a new organization. The trustees run the organization, paying themselves dividends on profits.

  7. FORMATION Organized by associates and legalized through state charter OWNERSHIP Stockholders, according to number of shares CONTROL AND MANAGEMENT Through Board of Directors, elected by the stockholders (usually one vote per share of stock held) NET PROFITS AND LOSSES Dividends: to stockholders = profits Lose: only the amount invested by stockholders according to number of shares LIMITED LIABILITY CORPORATION

  8. BUSINESS ORGANIZATIONS • Trusts or Monopoly • Companies in related fields combine under the direction of a single board of trustees. • Shareholders had no say. • Outlawed today.

  9. TRUSTS AND MONOPOLIES • BIGGER IS BETTER • A trust or monopoly controls an entire industry • make product cheaper • lower prices to customer

  10. MONOPOLIES AND TRUSTS

  11. Cartoon Rockefeller JOHN ROCKEFELLER • Captain of Industry • Came from a wealthy family • Bought a substitute during the Civil War. • Formed the first modern corporations in the oil industry Standard Oil • Was the first billionaire in the U.S. by 1900. • Used Vertical Integration and Horizontal Integration to gain a monopoly in the oil business.

  12. Rockefeller JOHN ROCKEFELLER • Philanthropist • Gave millions of his money to hospitals and colleges. • University of Chicago • Spellman College • National Parks • United Nations • Williamsburg • Cancer Research

  13. Carneige Picture ANDREW CARNEGIE • Captain of Industry • Monopolized the steel industry • Rags to riches story---came from Scotland very poor. • Used scientific ideas (Bessemer Process) to develop a better way to produce steel and sell a quality a product for an inexpensive price. • Used Horizontal integration.

  14. Coke fields Coke fields Coke fields Coke fields Coke fields purchased by Carnegie purchased by Carnegie purchased by Carnegie purchased by Carnegie purchased by Carnegie Iron ore deposits Iron ore deposits Iron ore deposits Iron ore deposits purchased by Carnegie purchased by Carnegie purchased by Carnegie purchased by Carnegie Steel mills Steel mills Steel mills purchased by Carnegie purchased by Carnegie purchased by Carnegie Ships Ships purchased by Carnegie purchased by Carnegie Railroads purchased by Carnegie VERTICAL AND HORIZONTAL INTEGRATION Vertical Integration You control all phases of production from the raw material to the finished product Horizontal IntegrationBuy out your competition until you have control of a single area of industry MONOPOLY

  15. Modern Day Example of Vertical Integration • Ford Motor company • What goes in an automobile? • Why is it an advantage for a company to own/control all production? Vertical Integration You control all phases of production from the raw material to the finished product

  16. Advantages Vertical Integration • You are always in control of supply of the products you need • In control of labor cost, land/resources • Always in control of the cost • Schedule your production of autos because you are in control of all factors • Can you give another example of this?

  17. Other Vertical Integrations • Boeing • Anheiser-Busch: all grown by own producers • McDonald’s: own cattle ranches • Oil companies • AOL Time Warner

  18. Horizontal Integration • Examples • Standard Oil • Carnegie Steel • Swift & Company: meat producers • United Fruit Company: bananas • Dole Pineapple Horizontal IntegrationBuy out your competition until you have control of a single area of industry

  19. Modern Day Examples of Horizontal Integration • Microsoft • PG & E • Comcast • Starbucks • De Beers

  20. CONRELIUS VANDERBILT • Formed a steamship company in 1829 • Dominated shipping along the Atlantic • 1849 established steamship that carried people from New York to San Francisco in Gold Rush days • Leading U.S. steamship owner, nicknamed “The Commodore” • Gained control of the Hudson River Railroad

  21. CONRELIUS VANDERBILT • After Civil War Vanderbilt bought most railroad lines from New York to Chicago • 1877, controlled 4,500 miles of railroads • Worth over $100 million • Philanthropist--donated $1 million to Vanderbilt University

  22. robber • Extortion:Forced against your will • Rebates: discount or refund on “freight charges” • Drawbacks / Kickbacks:Standard Oil gave certain railroads all its shipping business if it agreed to charge Standard Oil 25% to 50% less than its competitors • Buyouts:Larger corporations forced smaller businesses to sell out • Congresswas “bought out” by the monopolies • Spies:Stealing your competitor's ideas Small businessescomplained “monopolies” eliminated fair competition

  23. Cartoon Rockefeller JOHN ROCKEFELLER • Controlled the railroad by forcing them to pay him rebatesbecause of the volume of business he gave them. • Was called “Rock a Fellow” by many • Ruthless business man: “Pay no man a profit”

  24. Rockefeller/Control Govt Rockefeller was so wealthy, he dictated to the U.S. Government to protect big business---- laissez faire

  25. Rockefeller would be hated by many because he had too much control over the oil industry and the government as viewed by the common man-----Some believed he was corrupt because he took away the right to compete---free enterprise

  26. Trusts control govt Big business, monopolies controlled Congress through bribery. This is corruption

  27. “History repeats itself-----The Robber Barons of the Middle Ages and the Robber Barons of Today…..”

  28. Robber Barons or Captains of Industry “Captains of Industry” • The business leaders served their nation in a positive way. • They increased the supply of goods by building factories. • They raised productivity and expanded markets. • They created jobs that enabled many Americans to buy new goods and raise their standard of living. • They also created museums, libraries, and universities, many of which still serve the public today. “Robber Barons” • Business leaders built their fortunes by stealing from the public. • They drained the country of its natural resources. • They persuaded public officials to interpret laws in their favor. • They ruthlessly drove their competitors to ruin. • They paid their workers meager wages and forced them to toil under dangerous and unhealthful conditions.

  29. Social Darwinism • British economist, Herbert Spencer. • Advocate of laissez-faire. • Adapted Darwin’s ideas from the “Origin of Species” to humans. • Belief that there was a natural upper class and lower class. • “Survival of the fittest”

  30. Social Darwinism Belief that in the economic world the strongest companies will survive “The growth of a large business is merely a survival of the fittest.” J. Rockefeller

  31. Social Darwinism • Social Darwinists believed that companies struggled for survival in the economic world and the government should not tamper with this natural process. • The fittest business leaders would survive and would improve society. • Belief that hard work and wealth showed God’s approval and those that were poor were lazy andnaturally a lower class.

  32. Social Darwinism 1. All living things have always competed for survival. Survival of the fittest. 2. All living things have evolved over millions of years as a result of genetic changes. 3. Some plants and animals developed traits that helped them survive. 1. Every human activity individuals compete for success. 2. The unfit or incompetent lose and the strong or competent win. 3. These winners make up a natural upper class. 4. Hard worked paid off, and lazy were inferior. Social Darwinism 2

  33. 1st LAWS TO REGULATE BIG BUSINESS These are the first laws to regulate industry and big business. • Congress passed Interstate Commerce Commission (ICC). • U.S. government regulated interstate trade within the country. • End railroad corruption of charging high prices to ship goods and Rockefeller’s illegal deals. • Rebates/kickbacks/drawbacks were illegal. • In 1890, Congress passed a law which made trusts/monopolies illegal or any business that prevented fair competition. Interstate Commerce Act(1887) ShermanAntitrust Act(1890) To regulate means the US Government would make laws to oversee, adjust, fine tune and correct the unfair business tactics in industry and big business. Not take over or control it because that would violate laissez faire.

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